Sky TV calls the internet police

Victoria University's Graeme Austin considers what a win for Sky TV in its war on piracy might mean for New Zealand's copyright law

Sky Television has drafted a High Court application for an injunction that aims to force internet service providers (ISPs) to block access to websites hosting pirated material. If it goes ahead, the case will raise some interesting questions about ISPs’ business models – including whether they should shoulder some of the responsibility for the use of their services by their subscribers to commit copyright infringement.

ISPs typically claim they should not act as the “internet police”. They’re not breaching copyright, they say, it’s their subscribers. They cannot – and should not – be required to prevent their users from breaching other parties’ copyrights. The law typically doesn’t require X to take active steps to prevent Y from harming Z.

But it is not always that simple. The law does sometimes require us to take steps to prevent one party from harming others.

Suppose you owned a bar in a suburban shopping area. In an ideal world, all your patrons would drink responsibly. They would leave quietly and on time, disturbing none of the neighbours on the way. They would cause no alcohol-related harm to people or neighbouring property.

Unfortunately, the world is not ideal. Bar patrons can get rowdy. They can overstay their welcome. Drunk people can cause property damage and serious inconvenience – even physical harm – to others. Can bar owners always get away with saying, “It’s not us, it’s just our customers”?

Not necessarily. We’re very used to the idea that bar operators are required to take steps to reduce risks of harm. Duty managers must be on site. Intoxicated people may not be served. Alcohol-related incidents must be recorded. Bars might be required to maintain CCTV systems. When bar patrons cause serious disturbance, neighbours might invoke common law nuisance principles and get an injunction. Where patrons cause harm to others’ property, a bar operator might face liability for common law negligence.

Why does the law sometimes impose compliance obligations like these? One reason is that some businesses actually become more profitable as risks to others increase.

Take the bar example. Profits tend to go up as customers drink more and more. It would be tempting to say, “Not our problem: we’re not forcing them to drink.” But the higher the level of sales, the drunker the customers, accompanied by increased risks to others. Through their local authorities, communities say they should not necessarily be burdened with all of these risks, and the whole cost of guarding against them. The common law confirms this. So the law sometimes imposes restrictions and conditions – costs to a firm’s bottom line – requiring businesses to take reasonable steps to reduce the risk that their customers will harm others.

Blocking access to online material also raises the question of freedom of expression, which, in New Zealand, is protected under our Bill of Rights Act.

In broad terms, this is what will be at stake if Sky’s application is filed. ISPs do not want to be forced to increase compliance costs to reduce the risk subscribers will use their services in ways that infringe others’ copyrights. Copyright owners want to push some of the costs of protecting their property rights on to the ISPs. One way of doing this is to persuade the courts to issue injunctions requiring ISPs to block access to websites that facilitate ISP subscribers’ infringements. These sites are sometimes called “piracy sites” or “infringing websites”.

New Zealand law doesn’t currently give judges a specific power to issue “blocking injunctions” in copyright cases. This contrasts with the Australian Copyright Act, which gives judges a power to require ISPs to block access to foreign websites whose primary purpose is to facilitate copyright infringement. A similar power exists under the European Union Copyright Directive, and the power is now included in UK copyright legislation. “Blocking orders” have been part of Singapore’s copyright law since 2014.

While a number of injunctions have been issued under these laws, a vexed question is how the costs should be shared. Should copyright owners pay for all the technical costs of blocking the site, or should these all be borne by the ISPs, as just another cost of doing business? An appeal on this issue is pending in the UK Supreme Court.

If New Zealand copyright law lacks a specific blocking order provision, how can Sky Television think it will succeed? The draft application indicates that Sky intends to rely partly on the court’s “inherent” jurisdiction. This is simply the general power of a court to decide the issues that come before it. An English precedent supports this idea. In a recent case, the English Court of Appeal confirmed a court may issue a blocking order using its general powers in a case of online trademark counterfeiting – even without a specific statutory power aimed at trademark infringement. In the New Zealand case, the copyright owners will no doubt argue that the same principle should apply to copyright.

If the proceedings go ahead, the court will need to consider a number of difficult questions. Any kind of blocking order will interfere with an ISP’s ability to conduct its business in its own way. Blocking access to online material also raises the question of freedom of expression, which, in New Zealand, is protected under our Bill of Rights Act. This is why copyright owners invariably go after websites where the piracy is blindingly obvious. Sites that have mixed purposes – some infringing, some not – raise much more complex issues.

In the European Union, courts apply a “proportionality” analysis, which weighs up the different interests at stake in the light of the power to be exercised. The Australian statute lists a number of factors a court must consider before issuing a blocking order, including proportionality.

In the alcohol context, we can see the same kinds of ideas behind Local Alcohol Policies. They are a rough-and-ready way of distributing risks, without intruding too much on private parties’ business activity.

If it gets filed, Sky Television’s injunction application might not be so much about the individual case. It will probably be more about establishing bargaining positions. New Zealand’s copyright law is currently under review. Copyright owners will almost certainly advocate for the adoption of a specific blocking order provision in any new legislation. That will seem less of a leap if a court agrees it is already part of its inherent jurisdiction.

And if the law reform effort fails, the industry players may try to negotiate a private arrangement or code of practice. The outcome of this case might determine the angle of the negotiation table.

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